Lisa asks…
What is the difference between a federal Perkins loan and a subsidized direct loan?
So I recieved my Financial aid reward for college and was offered a perkins loan and a subsidized direct loan. My question is what is the difference and If I were to choose only one which one would be better. both are of the same amount.
Nagesh answers:
The Perkins loan has the lowest interest rate of any federal financial aid loan – the fixed rate on the Perkins is 5%, versus 6% for the subsidized Stafford that you were also offered. The Perkins is offered to students who are judged to have “exceptional” need.
The Perkins is also superior because there are no “origination” fees associated with it. The full amount of the loan will be credited to your student account, unlike the Stafford, which has a 2% origination fee. This is because the lender on a Perkins loan is your school, rather than a bank.
The only possible downside of the Perkins (compared to the Stafford) is that the repayment period on a Perkins loan is 10 years, whereas the repayment on a Stafford ranges from 10 to 25, depending on the amount borrowed.
I hope that helped – by the way, the Stafford is an excellent loan, too – far better than anything you could get from any non-governmental (private) source.
Good luck!
Betty asks…
Does Federal Direct Loans (FAFSA) also provide funds for housing and travel for medical school?
I am planning to go to medical school during the fall of 2012, but I have no idea how I will be able to get funds to pay for my housing and car expenses. I was wondering if the Federal Direct loans offer funds outside of tuition.
Nagesh answers:
Hi, from what I understand the Direct School Loans cover other expenses outside of tuition- as long as it’s considered an “education expense”. Perhaps you could find out more at http://directschoolloan.org and http://direct.ed.gov.
Cheers!
Michael asks…
How do subsidized Direct loans work?
Okay so i was offered a Direct loan for a college I am attending, I accepted the offer but what I don’t understand is, what happens if I decide not to use the loan at all? How does it work? and Why do I have to pay interest? What is interest and would I have to pay it if I don’t use the loan at all throughout the school year? Or, does the school automatically use my loans to pay for my classes and such? I also received financial aid.
Nagesh answers:
You can cancel the loan, look at the terms on the promissory note you signed (the contract) for the loan or call your financial aid office.
The interest does not start until it goes into repayment which is 6 months after you quit, graduate or fall below half time.
If you take it and then decide you dont want it or need all of it, then just take the refund and repay it.
All your federal aid will be deposited to your college account on yourcolleges disbursement date, usually there are 2, one before each semester. They will take out their charges for tuition, fees, meals, housing and any left will be refunded to you for books, etc.
Maria asks…
How long will it take after my Master Promissory Note is certified, to receive my Direct Student Loans?
My MPN was certified today and I also received a statement of disclosures from Direct Loans that has a disbursement date of 8/21 and the amount of the loans but the loans haven’t shown up in my student account summary on schools website. I called my school but however I can’t get an answer.
Nagesh answers:
The fact that your MPN was certified has nothing to do with when your school will disburse your loans. In many cases, students complete their MPN months before a disbursement is made. Also, the disbursement date on the disclosures is an estimate that assumes that all the requirements for disbursement are met. A school is not required to disburse on that date because there could be several reasons that prevent them from doing so (verification is not complete, the student hasn’t completed the required number of hours, etc.)
In general, schools will disburse close to the start of classes. The majority of schools wait until the student starts classes, and some wait until the add/drop period is over. If this is the first time you have received a loan, then your school may be required to wait 30 days before disbursing. However, you don’t need to worry about paying for your classes if your loan money isn’t in yet. If you have loan money scheduled to come in, your school will accept that as an anticipated payment.
Once the funds come in, your school will apply them to your account. The school’s charges will be deducted and if there is any left over (i.e. A credit balance), then it will be sent to you, usually in the form of a check or debit card. A school has 14 days from the day that the disbursement is posted to your account to refund a credit balance. Not all students receive a refund, however, because sometimes all of the funds are needed to pay the school’s charges.
The process does vary somewhat from school to school, so you really have to take it up with the FA department at your college. At this time of year, they are extremely busy so they may not be able to drop what they’re doing or get back to you immediately, but if you make an appointment you should be able to find someone who will be happy to explain how it all works at your particular school.
Robert asks…
How long does it take to recieve your finacial aide and Direct Loan Check?
I was wondering about how long after you have applied for Finacial aid and applied for a Direct loan do you get your check?
Nagesh answers:
After you have completed the FAFSA you will receive a SAR via mail – the school you have chosen to attend receives it as well. Disbursements of Pell Grants and Stafford Loans are done based on the school’s Disbursement schedule – check with the financial aid office at the institution you are attending.
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